All Forum Posts by: Jeff Kelly

@Jeffrey Mcintyre I would think you could do this by incorporating subtle name changes by using things like dashes "-" or by abbreviating differently. Maybe abc-homesellers for one and abchomesellers for the other. Or just make one website abchomesellers and the other abchomebuyers. I'm just throwing out ideas. I think that as long as potential clients see your company's name, they won't get too thrown off by the added "LLC" included. You could even have on the website something like "ABC Realty, LLC. Serving buyers and sellers."

Just looking to survey this community on this question: what % Cash-on-cash returns are your investors generally expecting these days? Feel free to include the geographic location in your answer, and / or building class type (A,B,C). I'm still noticing some investors expecting 12-15% in the midwest for average / B properties, for example. That's not to say they are actually getting 12-15%, necessarily. And Some seem to only want 8-10%. Thanks!

I agree with the recommendations everyone else has made so far. But I'll add that, within the category of learning from books, one of the most helpful ones I've seen is The Millionaire Real Estate Investor by Gary Keller. There are so many good ones, but that's one that goes beyond mindset (which is the first half of it) and gets into showing and building you a template / road map for whatever niche of RE you decide to go into. And it emphasizes the need to focus on a niche. It's one of the more actionable RE books out there that is still accessible and relevant to beginners.

@Gabe Amedee that's a helpful example. Thanks for that. If anyone else is reading this and is willing to type up a different example where the "best" strategy is something else, please feel free to do so. To me, this could be a pretty interesting discussion, because it's like those cooking shows on tv where they give the contestants the ingredients and they have to come up with a recipe using only those ingredients. A sharp RE investor is given a lead. It might not be the exact type of lead he was expecting, so the question becomes- how does he make the most of it.

I have read (I forget where) a little bit about how some experienced RE investors simply generate as many leads (I'm referring to distressed homeowner leads here) as they can, and then decide what investment strategy / exit strategy is best for each individual lead. And they might flip one lead, rent out another, owner-finance another, etc. I recall reading or hearing that you can base that decision on things like how much equity is in the house, how much work it needs, market conditions, etc. Much of it is probably just common sense but I'm sure some have gotten this down to a science, and I'd like to better understand how they decide such things. 

Is there anyone here who can give a rough outline for how to decide which strategy would be best for any given lead? Maybe there's a decision-tree or flowchart format for this kind of analysis? Or some Rules of Thumb, perhaps? I'd like to be able to look at an incoming lead, talk to the homeowner, and basically have something like a Swiss Army Knife of solutions / strategies in my head, and be ready to offer the right one for that particular house. Thanks.

As far as I understand, and please verify this for yourself, commercial banks are often willing to waive that 6 months "seasoning" period that other banks require. You might want to call around to a bunch of commercial banks and start asking if any of them would cash you out prior to 6 months. If I recall correctly, most will only go up to 75% LTV, however.

Is there any chance that OP did what Wayne Brooks said is done in Florida, buying multiple properties in one bundle, and then they each get reported at a higher price? That could explain the $110k OP supposedly paid for this. 

I'm doubting that's what happened, btw. Just wondering if that's possible in Indianapolis. 

And having met with some of the very helpful people on this thread, I can say that they are not the ones causing any trouble there. Also, everywhere I go in Indy, everyone I talk to says that Brett and his company are on the up-and-up. I keep hearing, "They're good guys." I've met with them, and it seems to be true. Sure, they need to make a profit like anyone else. I bet we could find a lot of examples where OP overpaid for properties,  while they were simultaneously overcharging their buyers for their work and results. 

There was recently a former OP property for sale in Fountain Square wasn't there? I could be wrong about this, but if I recall correctly, it had been "done" for an investor / flipper who found out only after the project was "done" that actually, lots of crucial work on major components (I think chimney was one of them) had not been done at all! OP had apparently just done whatever flashy cosmetic stuff they could do, and then put it on market even though they had not addressed those major structural component problems. And then the potential buyers' inspectors kept finding major things that hadn't been fixed. So they kept backing out. Seems to be a common story. I hope whoever bought that property a few months ago will be able to get those structural things done and still make a nice profit. 

@Grant Rothenburger @Ron S. Thanks for that info about the HELOC and when it could be called. I should've known that but it obviously helps clarify this couple's options. And Grant thanks for the suggestion of putting some money into fixing up the house. Excellent idea. The house seems to be in good condition with big capital-type improvements having been made regularly over the years. But fixing anything that will become an issue over the next 5-10 yrs now would be another way to make this plan a little clearer. Does anyone know how or if it could benefit this family to put the house into a trust? I'm not an expert on trusts.

Thanks for all the replies so far. Some of you might not have read the detail that says the couple apparently doesn't need the money from selling the house in order to pay for their retirement, etc. That's ok bc it was a long post, so I don't blame you! But I think if they don't need the money, then it would make sense to ask themselves how important it is to them that another generation takes over the house. And if that's important enough, then that's why some creative solution might be required. I appreciate the HELOC details a lot, such as that it might be difficult to get one with no active monthly W2 income. I am of the impression that most financial advisers would never think of a creative solution like getting a HELOC, or maybe even the simpler solution of just renting out the house for a while. Does anyone know of such a adviser or estate planner that is more in touch with unconventional approaches?

I’d love to see what kinds of creative ideas anyone here might have to try and solve the problem this family I know of is having with figuring out how (or whether) to keep their parents’ house in the family. There are so many creative solutions possible in RE, I’d like to hear about which ones might work in this case. Thanks for reading and thinking about this. I’d be especially interested in anything along the lines of using a Trust, estate, or any other legal entity or unconventional solutions, or quit-claiming, or any other ideas.

Here’s the situation: the parents are retired, mid/late 70s. The parents own the house free and clear. The father is in poor health and wants to sell the house soon, so as to leave his wife with zero responsibilities regarding maintaining their house as his health diminishes. They’ve owned the home for many decades, and the mother always hoped one of their children would move into this house, the “family house”. 2 of the 4 siblings live very nearby and if moving back into the family house to keep it in the family were something they could afford today, they’d each strongly consider it. Property taxes and maintenance make it seem unaffordable for them today, but within 3-7 yrs it’s conceivable that one of the siblings could afford to move into the house. But the parents will be forced by the father’s health issues to move to an assisted-living facility sooner than that, maybe even this year. The parents do not, apparently, need the money from the potential sale of their house to be able to afford the rest of their retirement and living expenses. If they did, they’d just have to sell it, obviously. It’s unknown whether the parents would want to pursue anything other than the conventional (simply sell it). But either way, what creative ways can you think of to help them “buy time” on the decision to sell the family house?

-House is worth $1-1.4 million.

-It could rent for probably $4-5k/month easy, but perhaps up to $6k (some have suggested $8k but that seems ridiculous and would probably lead to high vacancy). Affluent area.

-Property taxes of approx $22-25k/yr plus maintenance of probably thousands per year (it’s very old), maybe approaching $10k/yr (guessing), or more.

I thought of possible solutions for this myself, and please tell me how feasible these scenarios might be.

A) Parents move out, and simply rent the house out for a few years until the siblings know for sure whether they could afford to move into it. The siblings would manage the house. Approx $40k/yr in profits (see below)

B) The parents take out a HELOC on the house, take maybe 50-75% LTV in equity out of the house( $600-750k), and use that money as a 25-30% downpayment on some kind of investment property, maybe a $2-3million convenience store / drug store property or a multi family apartment building. Or since making HELOC payments and mortgage payments on the Investment Property would make it difficult to cash flow positively overall, maybe to avoid paying 2 mortgages, just buy a $700k building that has a 8-10% Cap Rate. And the siblings would manage the property manager of the investment property. The amount of equity taken out via the HELOC, and the percentage of the downpayment for the investment property would need to be calibrated so that the profits/cash flow of the investment property (after paying its mortgage) would be enough to cover the monthly HELOC payments, the property taxes, and the maintenance of the "family house". Then they could still rent out the family house in addition to getting the cash flow from the investment property. They could still decide to sell the family house in a few years if it becomes obvious that one of the siblings will not be able to afford to live in it. Monthly HELOC payments would be approx $3500/month at 5.5%.

House Expenses:

$23k / yr Property taxes

$15k / yr Maintenance

——

$38k / yr in expenses related to the house.

+$40k / yr HELOC payments

——

-$72,250/yr. in expenses and HELOC payments

Invest in a $700k Commercial Property bought with all-cash from HELOC, producing at 9% Cap Rate

+$63k in profits.

Rent out the House

$4500/month gross rents ($54k annual)

—-

$44,750 in net profits / yr. (before vacancy)

C) Any other ideas?

Thanks a lot for your ideas!